AGY-4163 | National Electricity Code Administrator Limited (NECA)

Full description

Following decisions made at Special Premiers' Conferences in October 1990 and July 1991, a National Grid Management Council (NGMC) was formed to develop plans for a coordinated electricity market spanning the States of Queensland, New South Wales, Victoria and South Australia and the Australian Capital Territory. In February 1994, the Council of Australian Governments (COAG) agreed to recommendations for regulatory arrangements for the national electricity market (NEM). These arrangements included regulation of its operation by way of a code of conduct that was subject to authorisation under the Commonwealth Trade Practices Act 1974. (1)

To administer the code, on 9 May 1996, the National Electricity Code Administrator (NECA), a company limited by guarantee, was formed pursuant to the acceptance of a Memorandum of Association and Articles of Association by the five participating jurisdictions, with New South Wales represented by its Minister for Energy. (2) The Articles regulated the membership of NECA, the appointment of directors, the conduct of general and ordinary meetings and matters to do with the conduct of business including recordkeeping, financial requirements, communications, use of the seal and other administrative details. They also provided for the appointment of a Chief Executive Officer and at least one secretary. (3) At the same time, the subscribers also signed a members' agreement. (4)

A separate company, the National Electricity Market Management Company Limited (NEMMCO) was established to manage the NEM. (5)

In June 1996, the National Electricity (South Australia) Act 1996 was assented to. This Act was the lead legislation for the establishment of the National Electricity Law (NEL), which was set out in the Schedule to the Act. (6) Under the South Australian Act, each of the participating jurisdictions was to enact a corresponding law within two years (amended to three years in June 1998). (7) New South Wales enacted its corresponding legislation, the National Electricity (NSW) Act 1997, in June 1997. (8) Under Section 6 of this Act, the South Australian Act was stated to apply as a law of New South Wales. (9) Both Acts were proclaimed to commence on 13 December 1998. (10)

The main functions of NECA, as set out in the Code and the Members' Agreement, were to:
- supervise, administer and enforce the Code, and ensure the effective and efficient implementation of the rules and standards in the Code;
- administer the ongoing development of, and changes to, the Code to achieve the market objectives;
- through the Reliability Panel, establish a framework of system reliability and security standards;
- facilitate the availability of alternative dispute resolution arrangements for the national market;
- collect information and statistics, publish reports and disseminate information relating to the performance of the national electricity market; and
- liaise effectively with the ACCC and jurisdictional regulators, in order to ensure the consistent and effective development and application of the Code. (11)

Under the Act, a third body, the National Electricity Tribunal, was established to review decisions made by NECA and NEMMCO and to hear and determine applications by NECA on alleged breaches of the Code. (12)

The work of the NECA effectively commenced on 18 August 1996 when an executive chairman was appointed. NECA's Board of Directors met for the first time on 5 November 1996, in Adelaide. (13)

In November 1996, NECA and NEMMCO jointly submitted the draft National Electricity Code (NEC) to the Australian Competition and Consumer Commission (ACCC) for authorisation. (14) The ACCC made a final determination on the Code in December 1997, highlighting issues requiring a number of changes. The market launch version of the Code was published on 19 November 1998. (15) The NEC contained the rules and procedures that regulated the market and governed access to transmission and distribution networks. It defined the terms of participation in the market for all market participants, including generators; transmission, distribution and market network service providers; market traders; retailers; and wholesale customers. (16)

Tasmania became the sixth participating jurisdiction of the National Energy Market on 29 May 2005. (17)

In 2002, an independent review of the energy market, commissioned by COAG, made a number of recommendations for the improvement of the system including the creation of a National Energy Regulator which would encompass the roles of NECA and energy-specific roles of the ACCC. This report was presented to the Ministerial Council on Energy (MCE) on 20 December 2002. (18) In December 2003, the MCE reported to COAG recommending that NECA be abolished following the establishment of two new statutory commissions, the Australian Energy Market Commission (AEMC), with responsibility for rule-making and market development, and the Australian Energy Regulator (AER), with responsibility for market regulation. (19)

These changes came into force on 1 July 2005 with the commencement of a new National Electricity Law under the National Electricity (South Australia) (New National Electricity Law) Amendment Act 2005 (Act No.14, 2005). (20)

By April 2005, the NECA offices had already been largely vacated, with some staff transferring to the AER, and a consultant liquidator engaged to assist the company prepare for voluntary liquidation. (21) However, NECA could not be formally dissolved while there were outstanding pre-July 2005 code-breach and other matters to be finalised. (22) At its meeting in December 2005, the Board agreed to reduce the number of directors from seven to two, to reduce directors' remuneration and terminate the lease on its Adelaide premises. (23)

NECA appears to have entered into voluntary liquidation on 24 October 2006. (24)

Endnotes
1. National Electricity (New South Wales) Act 1997 (Act No.20, 1997), Preamble.
2. National Electricity Code Administrator Limited, Memorandum and Articles of Association, 9 May 1996 (Attachment to TRIM D05/287).
3. Loc. cit.
4. NECA Members Agreement, 9 May 1996 (Attachment to TRIM D05/287).
5. The performance of the national electricity market - Final report, NECA, June 2002, p.10.
6. National Electricity (South Australia) Act 1996 (Act No.44, 1996), Schedule - National Electricity Law.
7. National Electricity (South Australia) Act 1996 (Act No.44, 1996), Schedule, s.5.
8. National Electricity (NSW) Act 1997 (Act No.20, 1997).
9. Ibid., s.6.
10. SA Government Gazette, 8 December 1998, p.1819; NSW Government Gazette No.171, 11 December 1998, p.9462.
11. National Electricity Code Administrator Annual Report 1997-98, p.6.
12. National Electricity (South Australia) Act 1996 (Act No.44, 1996), ss. 9, 17.
13. National Electricity Code Administrator Annual Report 1996-97, p.5.
14. National Electricity Code Administrator Annual Report 1996-97, p.8.
15. National Electricity Code Administrator Annual Report 1998-99, p.18.
16. National Electricity Code Administrator Annual Report 2003-04, p.7.
17. SA Government Gazette No.50, 30 May 2005, p.1641.
18. Council of Australian Governments Energy Market Review, Towards a Truly National and Efficient Energy Market, 20 December 2002, p.96.
19. Ministerial Council on Energy, Report to the Council of Australian Governments - Reform of Energy Markets, 11 December 2003, p.5.
20. SA Government Gazette No.64, 30 June 2005, p.2092.
21. NECA Quarterly Report, January to March 2005, April 2005, p.1.
22. Letter of 23 November 2005 to Executive Director, Energy Division, SA Department for Transport, Energy and Infrastructure. SANSW ref: NRS 21124/, [49].
23. Minutes of the ninety-third meeting of the directors of the National Electricity Code Administrator Limited, 7 December 2005. SANSW ref: NRS 21125, [2].
24. ABN Lookup, current details for 18 073 942 775 http://www.abr.business.gov.au/SearchByAbn.aspx?SearchText=18073942775 (accessed 28 March 2017).